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Khabarni – Bank customers in Lebanon are awaiting the fate of their deposits exceeding $ 150 billion, after the deadline set by the Central Bank of Lebanon to force banks to increase their capital.
In August 2020, the Banque du Liban obliged banks operating in the market to increase their capital by 20% and to reconfigure their accounts with corresponding banks by 3%, at the latest at the end of February.
And last Monday, the Central Bank announced the start of the review of the status of banks after the expiry of the deadline, as part of a plan to restructure the banking sector, which consists of 28 local banks and an incoming out of a total of 64 licenses.
From there, the banks are confronted with several possibilities, of which the merger, the withdrawal of its authorization or the declaration of bankruptcy, especially as uncertainty surrounds the fate of the deposits entrusted to them.
As a result, the value of the lira has declined in an unprecedented manner since the country entered its financial crisis as the exchange rate against one dollar hit the 10,000 threshold on the black market, while the exchange rate official date was 1510.
Bad posture
In view of the banks ceasing to give their money to depositors, economist Jassem Aujqa said there was no possibility of canceling banks’ commitments because the constitution protects deposits.
“Deposits are made up of two parts, the first is in lira, and that has no problem because the Central Bank is the source of money and is able to provide it … But the problem is with the dollar, and it has become known that the banks don’t have dollars to pay them, ”Ajaka explained.
“Deposits are a legal requirement and banks need to map the solutions and present them to depositors. They are required to indicate to the Lebanese people a specific date on which their deposits will be returned to them in any currency, if the result is that the bank is unable to raise its capital. “
The objective of the Central Bank of Lebanon in increasing the capital of banks is to provide walls of protection for depositors’ money, and to indirectly restructure the number of operational banks, to fewer and more powerful entities.
In the event that the bank is not able to comply with the central bank’s decision, “the license must be withdrawn, and we know that there are between 10 and 15 banks which are able to fulfill the requirements. conditions, and the others are in a difficult situation … and here it will be before a merger or a liquidation, ”according to Ajaqah.
In the event of bank failure, he replied: “The losses are supposed to be covered by the capital of the bank, and this is where the importance of raising the capital lies because the losses are covered by the capital”.
Depositors’ funds
In this regard, financial expert Patrick Mardini said that “depositors’ money was partly spent in the form of loans to the central bank, and the latter redistributed it to the government”.
Mardini explained: “The banks loaned part of the clients’ deposits in dollars to the Central Bank, while the Bank of Lebanon loaned the government in Lebanese pounds.”
“Even if the government returns the money to the central bank, it will refund it in lire, and the central bank has to pay the money to the banks in dollars, and therefore there is an exchange rate difference due to the deterioration. of the exchange rate. value of the lira, which creates a big loss. “
The capital of banks operating in Lebanon stands at $ 20 billion, and a 20% increase means there is an addition of $ 4 billion, which most banks will struggle to meet.
Distribution of losses
Lawyer Dina Abu Zour of the Association of Depositors explained: “Small and medium depositors, they should not take any responsibility … according to the law, the deposit must be returned to its owner in the same currency, and if it is in dollars, it must be returned in dollars. “
Regarding the fate of the depositors’ money, Abu Zour confirmed, “We in the association have filed over 300 lawsuits, and we have won some of them with first-rate judgments. “
“Lebanese justice and expatriates who put their money in Lebanon should file a complaint.”
At the end of last September, customer deposits totaled 227.5 trillion pounds ($ 150.6 billion), according to the official rate, by $ 30.4 billion in lira and $ 120.2 billion in foreign exchange.
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